Once the economy is on firm footing, Fannie and Freddie should be converted into private companies that compete in the mortgage market on a level playing field with other firms. Banks should be required to meet sensible capital requirements to prevent overleveraging. The credit-rating agencies need to reevaluate their model for analyzing complex financial assets. And boards of directors must put an end to compensation packages that create the wrong incentives and reward executives for failure.
At the same time, we must be careful not to overcorrect. Overregulation slows investment, stifles innovation, and discourages entrepreneurship. The government should unwind its involvement in the banking, auto, and insurance sectors. As it addresses financial regulation, Congress should not infringe on the Federal Reserve’s independence in conducting monetary policy. And the financial crisis should not become an excuse to raise taxes, which would only undermine the economic growth required to regain our strength.
Above all, our country must maintain our faith in free markets, free enterprise, and free trade. Free markets have made America a land of opportunity and, over time, helped raise the standard of living for successive generations. Abroad, free markets have transformed struggling nations into economic powers and lifted hundreds of millions of people out of poverty. Democratic capitalism, while imperfect and in need of rational oversight, is by far the most successful economic model ever devised.
The nature of the presidency is that sometimes you don’t choose which challenges come to your desk. You do decide how to respond. In the final days of my administration, I gathered my economic advisers for a last briefing in the Oval Office. I had assembled a strong, experienced team that was capable of adapting to the unexpected and making sound recommendations. We had done what we believed was necessary, knowing it would not always be popular. For some in our country, TARP had become a four-letter word. I believe it helped spare the American people from an economic disaster of historic proportions. The government made clear it would not let the economy fail, and the second Great Depression that Ben Bernanke warned about did not happen.
As I looked into the tired faces of the men and women of my economic team, I thought about all my administration had been through. Every day for eight years, we had done our best. We had given the job our all. And through every trial, we had been honored to serve the nation we love.
*Many small business owners are sole proprietorships, limited partnerships, or Subchapter-S Corporations, meaning they pay their business taxes at the individual income tax rates.
**The top 1 percent of taxpayers went from paying 38.4 percent of overall taxes to 39.1 percent, while the bottom 50 percent saw their share decrease from 3.4 percent to 3.1 percent.
***Debt-to-GDP is the average measured at the end of each calendar year. Average spending, taxes, and deficits are calculated for fiscal years, which end September 30. Thus, the average of four or eight fiscal years excludes the effects of any policies implemented in the last three months and twenty days of a presidential term. If full-year FY ’09 numbers were included in my averages, they would be: spending = 20.2%; taxes = 17.5%; deficits = 2.7%. This would incorporate spending for TARP and the initial auto loans as projected by Congressional Budget Office in January 2009. These figures overstate the additional spending, since the vast majority of TARP funding will be paid back.
****The price was later renegotiated to ten dollars per share.
*****The United States, Japan, Germany, Great Britain, France, Italy, and Canada.
******Responsibility for shaping the deal fell to Dan Price, a tenacious lawyer on the NSC staff, and Dave McCormick, the capable undersecretary of the treasury for international affairs.
began Tuesday, January 20, 2009, the same way I had started every day for the past eight years: I read the Bible. One of the passages that final day was Psalm 18:2—“The Lord is my rock, my fortress and my deliverer; my God is my rock, in whom I take refuge.” Amen.
A little before 7:00 a.m., I took the elevator to the ground floor of the White House, walked down the Colonnade, and opened the glass-paneled door to the Oval Office for the last time. Josh Bolten was waiting inside. He greeted me with the same words he’d used every day as my chief of staff: “Mr. President, thank you for the privilege of serving.”
On a normal morning, the West Wing would be bustling with aides. But that last day, the building was eerily quiet. There were no ringing phones, no television sets tuned to the news, no meetings in the hallways. The only sound I heard was the occasional buzz of a workman’s drill, refitting the offices for a new team.
I left a letter on the Resolute desk. Continuing a presidential tradition, I had written to congratulate my successor and wish him well. The note was in a manila envelope addressed to “44.”
“What an honor it has been to come to work in this office every day,” I told Josh. Then I put my coat on, walked out the door, and took one last lap around the jogging track on the South Lawn, where Spot and I had walked the morning I gave the order to liberate Iraq.
Leaving the Oval Office for the last time. White House/Eric Draper
My next stop was the East Room, where the White House residence staff had gathered. The packed room was a stark contrast with the emptiness of the West Wing. Nearly every member of the residence staff was there: the florists who put fresh bouquets in the Oval Office every morning, the butlers and valets who made our life so comfortable, the carpenters and engineers who keep the White House in working condition, the chefs who cooked us such fabulous meals, and, of course, the pastry chef who fed my sweet tooth.
Many on the residence staff had served not only for the past eight years, but during Mother and Dad’s time in the White House as well. “You’ve been like family to us,” I told the gathering, with Laura, Barbara, and Jenna at my side. “There are some things I’m not going to miss about Washington, but I’m going to miss you a lot. Thank you from the bottom of our hearts.”
Barack and Michelle Obama arrived on the North Portico just before 10:00 a.m. Laura and I had invited them for a cup of coffee in the Blue Room, just as Bill and Hillary Clinton had done for us eight years earlier. The Obamas were in good spirits and excited about the journey ahead. Meanwhile, in the Situation Room, homeland security aides from both our teams monitored intelligence on a terrorist threat to the Inauguration. It was a stark reminder that evil men still want to harm our country, no matter who is serving as president.
With Barack Obama and his wife, Michelle, in the Blue Room on Inauguration Day. White House/Eric Draper
After our visit, we climbed into the motorcade for the trip up Pennsylvania Avenue. I thought back to the drive I’d made with Bill Clinton eight years earlier. That January day in 2001, I could never have imagined what would unfold over my time in office. I knew some of the decisions I had made were not popular with many of my fellow citizens. But I felt satisfied that I had been willing to make the hard decisions, and I had always done what I believed was right.
At the Capitol, Laura and I took our seats for the Inauguration. I marveled at the peaceful transfer of power, one of the defining features of our democracy. The audience was riveted with anticipation for the swearing-in. Barack Obama had campaigned on hope, and that was what he had given many Americans.